Last checked at 25 Nov 2021 07:00
25 November 2021
FORTERRA PLC
Trading Update: Continued Strong Performance
Forterra plc, a leading UK producer of manufactured masonry products, provides this trading update covering the four months ended 31 October 2021 (the "period").
Headlines
· Strong trading performance in the period with brick sales volumes up 6% vs 2019 leaving YTD brick sales volumes in line with 2019
· Significant cost inflation experienced across a range of categories including energy, raw materials and transportation. c90% of energy requirement secured for remainder of the year
· Concrete product selling price increases to recover cost inflation have already been achieved with significant brick price increases secured from 1 January 2022
· Accordingly, we expect to deliver a 2021 result in line with management's expectations
· Strong market demand has meant that inventory levels remain at very low levels
· Short term impact on margins experienced due to cost inflation in 2021, but selling price increases are expected to benefit margins in 2022
· Positive market demand dynamics looking into 2022 although business remains broadly capacity constrained until Desford brick factory commissioning
· Around 60% of total energy requirements secured for 2022 with c85% secured for Q1 when risk of volatility is greatest
· Desford and Wilnecote expansion projects progressing according to plan with commissioning of Desford expected in Q4 2022, within £95m budget
Stephen Harrison, Chief Executive of Forterra plc commented:
"The strong trading seen in the both the housebuilding and repair maintenance and improvement (RM&I) markets in first half of the year continued into the second half. As expected, we encountered significant pressures across our supply chain in the period, although, due to the agility of our operational management, we have been successful in limiting any disruption. We also experienced meaningful input cost inflation, which has had a short-term impact on margins, however we are mitigating this through significant selling price increases. Notwithstanding these factors, we continue to anticipate delivering a full year result in line with management's expectations, with higher than expected revenues offsetting the increased cost base.
"Heading into 2022 we are optimistic about the continuing buoyant demand for our products, underpinned by favourable market fundamentals. With the brick capacity uplift provided by the new Desford brick factory now only a year away, and with the Wilnecote project increasing our presence in the commercial and specification market from 2023, we are confident that Group performance will continue to strengthen."
ENQUIRIES
Forterra plc +44 1604 707 600
Stephen Harrison, Chief Executive Officer
Ben Guyatt, Chief Financial Officer
FTI Consulting +44 203 727 1340
Richard Mountain / Nick Hasell